Fed Proposes Risk-Based Overhaul Of AML Rules For Banks
By CU Today Staff —
WASHINGTON— The Federal Reserve has proposed changes to its anti-money laundering (AML) requirements that would shift banks toward a more risk-based approach, directing compliance resources toward higher-risk customers and activities while easing the emphasis on technical program deficiencies.
The proposal is designed to align the Fed's rules with broader AML reforms proposed earlier this year by the Treasury Department's Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration, the Fed said.
Under the proposal, banks would be required to incorporate FinCEN's national AML priorities into their risk assessment processes and ensure their AML programs are reasonably designed to identify, assess and mitigate illicit finance risks. The Fed said supervisory and enforcement efforts would focus on significant failures to implement an effective AML program rather than technical shortcomings once a program has been established.
The proposal mirrors a broader FinCEN initiative unveiled in April that seeks to modernize Bank Secrecy Act compliance by allowing financial institutions to devote more resources to higher-risk customers and transactions instead of a one-size-fits-all approach. Treasury has said the changes are intended to reduce unnecessary compliance burdens while improving the usefulness of information provided to law enforcement and national security agencies.
Comments on the Federal Reserve's proposal will be accepted for 60 days following publication in the Federal Register. The proposal is part of the agencies' ongoing implementation of the Anti-Money Laundering Act of 2020, which directed regulators to build a more effective, risk-focused AML framework across the banking system.
Originally reported by CU Today.